Opening of Eurasia Week 2018: Drawing the lessons, shaping the future

Delivered in Paris at Eurasia Week 2018 on November 19, 2018.

We were pleased to have His Excellency Dr. Abdullah Abdullah, Chief Executive of the Islamic Republic of Afghanistan present.

Chief Executive, Deputy Prime Ministers, Ministers, Ambassadors, colleagues, ladies and gentlemen,

Welcome to the fifth OECD Eurasia Week. Today we bring together representatives of Eurasia countries, OECD members, the European Union, and all the major partners for our work in the region.

For more than 25 years, the OECD has worked with partners in Eurasia countries on issues as diverse as anti-corruption, environmental protection, private-sector development and social policy.

One of the cornerstones of that co-operation, The OECD Eurasia Competitiveness Programme, supports structural reforms to enhance competitiveness and facilitate transitions to inclusive market economies.

This programme also provides a gateway for Eurasia countries to align themselves with OECD legal instruments and benefit from some of the valuable facets of the OECD that drive policy improvement: peer reviews, policy recommendations and frameworks, knowledge sharing, and monitoring of reforms, and, in the case of Afghanistan and Azerbaijan, comprehensive country reviews. I am so pleased that we have His Excellency Dr Abdullah Abdullah, Chief Executive of the Islamic Republic of Afghanistan, with us today.

This year will mark the 10th anniversary of the Programme. And so, under the theme of “Drawing the lessons, shaping the future”, the next three days offer us an opportunity to look back on a decade of challenge and reform, to take stock of the main lessons learned and to reflect together on how these can shape the policy agenda for the years ahead.

 

Global Context

It has been an eventful decade, punctuated by crises and unexpected turning points, not only the global crisis a decade ago, the consequences of which are still being felt, but also – and of particular importance for Eurasia – the drop in commodity prices in 2012-14.

Overall, growth rates across the region have fallen well below the levels seen before 2008 and convergence with the advanced countries in terms of productivity and incomes has largely stalled. The region seems to be regaining momentum this year – growing at 3%, much better than the average 1.4% for OECD, but that is still less than half the rate recorded before the crisis. So more must be done to re-establish that convergence dynamic.[1]

Despite their specific histories and characteristics, Eurasia countries ultimately face the same great developmental challenge that confronts the rest of the world: re-establishing a strong, stable growth trajectory that can bring greater prosperity to all citizens, while tackling issues such as environmental degradation – notably climate change – and rising inequalities. Our overall agenda – not just this week but in all our co-operation with Eurasia – is to build more resilient, inclusive and sustainable economies in the decade ahead.

And in this regard, Eurasia countries have been making great strides over the past decade to reduce external vulnerabilities and create new opportunities for growth and diversification.

For example, Eurasia countries have continued to deepen their integration into the world economy.

 

We have seen improved economic co-operation and increased trade within the region and with its neighbours, especially the European Union,[2] as well as growing investment in the infrastructure needed to better connect Eurasia countries to one another and to the rest of the world.[3]

OECD-Eurasia Collaboration Focus for the Future

As the world will never be without turbulence, our goal in future work is to continue building more resilient economies in Eurasia to ensure prosperity for all.

At the OECD we are encouraged by the commitments your countries have shown in driving reforms to do this, which we will discuss over the coming days. The OECD is committed to supporting the region’s work, in particular in the following four areas, amongst others.

Firstly, we are committed to making SMEs a key driver of economic diversification in the region. Most jobs in Eurasian countries are still in very low‑productivity sectors, while the leading sectors – especially resource extraction – are capital‑intensive and create little employment. Increasing productivity and building resilience will require the emergence of new sectors and activities, reducing reliance on primary product exports and migrant remittances. Countries should therefore prioritise strengthening regulatory and institutional environments and improving conditions for entrepreneurship and private sector-led growth. OECD research has found that SMEs in this region remain more credit-constrained than other EU countries.[4] This restricted access to finance is not only an obstacle to entry and doing business in itself, but can also hinder firm performance by creating barriers to innovation and internationalisation.

This is where the OECD can help, and our work with all of you has tackled this through programmes to strengthen entrepreneurship, increase access to finance for SMEs, improving skills, and improving supply chain financing. Fostering dynamic SMEs can lead to more resilient, diversified economies, greater productivity, and greater job opportunities.

Secondly, and this is an issue I am personally very engaged in, we are committed to supporting you unlock the potential of women in the region, who are currently underrepresented in the labour force. Female labour force participation across the region was almost 9 percentage points below the OECD average in 2017. Perhaps because of this, gender wage gaps across the region are also larger than across most of the OECD: in the bestperforming Eurasia countries, the gender pay gap exceeds 25% of men’s average wages. The region-wide average stands at 30%, as against just over 14% for the OECD.

Not only is this unjust; it is also a waste of talent and resources, and is a wasted opportunity to boost the economy. To encourage more women into work, it is important to have public policies such as maternity and paternity leave, affordable and accessible childcare facilities, education, as well as employers offering flexible working policies to enable women and men to balance their work with their caring responsibilities. Incentives to encourage female entrepreneurship and facilitating access to digital technologies is also crucial – we’re witnessing an 11% global gap in men and women’s use of the internet; indeed our recent report Bridging the Digital Gender Divide found that women worldwide are being left behind in the digital world. It’s also crucial to enshrine women’s rights into law, and have these rights effectively implemented to protect women and allow them to succeed. Alongside these measures, it is important to ensure equal rights for men and women, and make efforts to change mind-sets and traditional attitudes.

It is these attitudes that are the hardest to turn around – but education, public campaigns, legal frameworks can all help. It is also important to protect women from violence, which is all too prevalent. Here too, there is the question of traditional attitudes and social acceptance from many men and women. Across the world, 28% of women think violence against them is justifiable in certain contexts. In Afghanistan, it is as high as 80%. So it is important to educate men and women and provide women with opportunities to be economically independent and also to build their self-confidence and sense of self-worth.

Progress towards gender equality can make our societies fairer and more inclusive, while also unlocking the talents and productive potential of half the population. We cannot overlook this as we seek to lay the basis for broad-based prosperity.

Fortunately, several Eurasian countries have adopted national gender strategies, including Kazakhstan and Georgia, and they have begun to overhaul legislation restricting women’s economic opportunities. Ukraine recently abolished rules restricting women from pursuing 450 professions. All Eurasia countries are Parties to the Convention on the Elimination of All Forms of Discrimination Against Women.

Thirdly, Eurasia’s increased integration into global value chains is of great importance. OECD estimates of the connectivity gap facing Central Asian countries, in particular, suggests that these countries’ access to the centres of global demand is currently about half that of Germany or the United States.[1] The OECD aims to support Eurasia countries in leveraging better transport policies and infrastructure to facilitate greater integration. In addition to this focus on improving “hard” infrastructure, subsequent work should focus on promoting ethical and efficient trade facilitation and infrastructure governance, to ensure that countries really do reap the potential economic benefits of enhanced connectivity.

Lastly, governance remains a central issue, not only for infrastructure, but in all our work in Eurasia. Our Anti-Corruption Network works with countries across the region on prevention, detection and enforcement of corruption. This is something we are very proud of – the OECD’s Anti-Bribery Convention is now over 20 years old, and has done much to help countries implement laws and best practices to tackle corruption. Moreover, anti-corruption is mainstreamed into our work on economic reforms, much of which seeks to reduce corruption potential while improving state effectiveness, by streamlining regulations and promoting digital solutions.

 

At the OECD, we are proud to be working with all of you and I am thrilled that you are all here taking the opportunity to reflect together, learn from one another, and discuss how best to shape our future co-operation. Let’s continue to work together on creating more inclusive, just, and equitable economies for all.

Thank you.

[1] The region’s aggregate GDP has grown by just under 3% a year in the last 10 years. This is faster than OECD economies (1.4%), the EU (0.9%) or Russia (1.1%), but still less than half the rate recorded over the decade to 2008.

[2] Within Central Asia, there has been a rapid increase in trade co-operation since late 2016. As regards the EU, Georgia, Moldova and Ukraine now have Deep and Comprehensive Free Trade Agreements with the EU, while Kazakhstan has concluded an Enhanced Partnership and Co-operation Agreement with the Union, and both Kyrgyzstan and Armenia are negotiating new agreements of their own. The Union has also undertaken to negotiate such an agreement with Uzbekistan.

[3] Estimated total cost of the BRI more than $1tn, estimated Chinese investment as of 2017 more than $210bn (Morgan Stanley, www.morganstanley.com/ideas/china-belt-and-road and The Guardian, www.theguardian.com/cities/ng-interactive/2018/jul/30/what-china-belt-road-initiative-silk-road-explainer )

[4] https://www.oecd.org/eurasia/competitiveness-programme/eastern-partners/Enterprise-Performance-and-SME-Policies-in-Eastern-Partner-Countries-and-Peer-Regions.pdf

[1] From forthcoming ITF report as part of the OECD-ITF project “Enhancing Connectivity in Central Asia”. The ITF’s connectivity indicator is based on time and cost required to acces markets accounting for shares of global GDP.

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